Sahara and BCCI - 'Corrupt begets Corrupt'

It is fascinating that a group as tainted and corrupt as Sahara continues to not only remain a sponsor of the Indian Cricket Team but also has the audacity to play hardball with the BCCI. In a country of over a billion people who follow cricket as a religion, Sahara threatened to pull sponsorship and got BCCI, world's most powerful cricket board, to cow down.

One would believe there is no dearth of sponsors willing to pay top dollars to win sponsorship of the Indian Cricket team but that does not seem to be the case. BCCI did not get a single bid for sponsorship when Sahara's previous sponsorship contract expired in Dec 2009. After BCCI dropped the floor from 3 crore to 2.5 crore per match, Sahara outbid Bharti in a two way contest. Despite the emerging middle class that is quality and brand conscious, corporate sector's focus on building brands and go international and international companies competing to build a presence, BCCI could not get anyone except the incumbent and Bharti to bid in 2010.

I think the reason for this is fairly simple - 'Corrupt begets Corrupt'. Just like Sahara is probably one of the most corrupt and least transparent corporate groups in India, BCCI is one of the most corrupt and opaque sports authorities in the world. Why would any sane corporate want to get involve with a messy bunch of corrupt politicians who run the cricket board. I am actually surprised Bharti did bid for the sponsorship.

Read on for the credentials of the Sahara Group:

Sahara rose to prominence on the strength of its retail savings collection business - a network of agents going door to door to collect as little as 10 bucks a day in recurring deposit schemes. The business was a roaring success, having a depositor base of more than 6 million mostly poor people and reaching a corpus of 150 billion Indian rupees (USD 3 Bn). This business was extremely profitable until the Central Bank cited a number of irregularities and violations. Central Bank cancelled its certificate of one of the entities and barred the other one from accepting any fresh deposits and pay off all existing deposits by June 2015. This matter is now sub-judice in the Supreme Court.

Funny part is Sahara has not given its accounts to the Court despite repeated requests saying the matter can only be investigated by the Corporate Affairs Ministry where they used to have a friend in Salman Khurshid, a fellow U.P. politician. Not to digress but Khurshid also happened to be the defense lawyer for SIMI, the Islamic militant organization in India alleged to be responsible for many bomb blasts. It is widely believed by RBI and SEBI that there are no assets matching these customer deposits and money may well have been siphoned off.

Sahara's housing projects launched with much fanfare and national advertising campaigns in 2003-04 collected hundreds of millions in advance money from innocent customer. Outlook ran a fantastic story (http://business.outlookindia.com/article.aspx?266568) on the light of these customers who have been waiting for more than 7 years now for their apartments but none has been delivered as yet. To run salt on the wounds, Sahara filed a prospectus to list the real estate arm with SEBI and at least SEBI is doing it job of doing due diligence and has held approvals for the IPO due to concerns on disclosure.

Sahara Group is also alleged to be involved in the 2G scam. Sahara is supposed to have acted as a money laundering agent for movement of illicit money. The Group is also alleged to have threatened the investigative officers with running stories on them in their newspapers and news channels. Objective was clearly to stop them from investigating the Sahara links.

Sahara's political connections with Amar Singh, probably the most slimy, gross and corrupt political middlemen India has ever seen and with the Samajwadi Party.

BCCI is not far behind:

BCCI is the cozy club for politicians and all parties have made BCCI as the place where they not only get publicity and red carpet treatment but also big bucks. Sharad Pawar leading a sports body - need I say more? We all remember Shashi Tharoor resigning from Union Ministry for his role in influencing auctions and personally benefiting later.

BCCI rejected Government's proposal to come under the purview of the 'Right to Information' Act and also rejected the Sports Bill because they want to stay free from public scrutiny and accountability.

BCCI publishes no audited accounts despite being extremely cash rich and profitable. England and Wales Cricket board published an annual report with audited accounts. Why is the BCCI special? Why should they not be audited by CAG or at least an audited firm? Shouldn't we get to know the complex web of related party transactions that go on inside BCCI?

IPL auctions, TV and sponsorship rights, ticket sales and other contracts are worth billions of dollars every year and opaque contracts, siphoning of money continues to rule. Conflict of interest is a vaguely understood term as a critical Board member himself own stakes in an IPL team.

BCCI's elections are dramatic, dirty and hostage to political affiliations. Courts have had to step in to stop the backdoor lobbying and financial muscle power of the politicians but to no avail.

This relationship is disgusting at so many levels but the most disgusting of all is that thousands of innocents have been fooled and would continue to be fooled into believing Sahara is a reputable group solely due to its sponsorship of Indian Cricket team. A street hawker or migrant construction worker or for that matter a lower middle class housewife does not know of the RBI or SEBI ban on Sahara; all they know is that if Sachin and Dhoni play for India with shirts printed with bold letter Sahara and its embroidered logos, it must be a big and good firm. Sahara's logo on the Indian Cricket team's shirts and its newspapers and news channels (often used as a mouthpiece for group businesses and political friends) create enough pull for these people to part their hard earned money to those commission agents employed by Sahara with the hopes of getting small daily deposits back in one large amount. They probably need not worry as Sahara has enough political clout to negotiate a bailout.